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Jan 11, 2013: REFERRED TO CONSUMER PROTECTION

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BILL NUMBER:S2138

TITLE OF BILL: An act to amend the general business law, in relation to the price gouging of medicine

PURPOSE: This legislation adds medicine to the list of goods and services that can be classified as possibly being subject to price gouging. This legislation provides a right of action to an individual or family of an individual hurt by such practice.

SUMMARY OF PROVISIONS:

Section 1: Section 396-rrr of the general business law is amended to add medicine to the list of consumer goods that can be classified as subject to price gouging. The classification of medicines falling under this section of law will be determined by the publicly reported drug shortages reported by the U.S. Food and Drug Administration.

Section 2: Bans the price gouging of medicines listed as been in short supply by the USFDA.

Section 3: Allows for the courts to determine if the price established for a drug in short supply is Unconscionably, excessive and establishes the criteria for the court to consider such determination.

Section 4: Extends medicine price gouging prosecution powers to the Attorney General of New York State and allows injured Person to bring action to recover damages.

JUSTIFICATION: According data uncovered by the Associated Press and made public on to a September 23, 2011, there is an ongoing and "severe shortage of drugs for chemotherapy, infections and other serious ailments is endangering patients and forcing hospitals to buy life-saving medications from secondary suppliers at huge markups because they can't get them any other way."

An Associated Press review of industry reports and interviews with nearly two dozen experts found at least 15 deaths in the past 15 months blamed on the shortages, either because the right drug wasn't available or because of dosing errors or other problems in administering or preparing alternative medications.

Just over half of the 549 U.S. hospitals responding to a survey this summer by the Institute for Safe Medication Practices, a patient safety group, said they had purchased one or more prescription drugs from so-called "gray market vendors" - companies other than their normal wholesalers. Most also said they've had to do so more often of late, and 7 percent reported side effects or other problems.

"Hospital pharmacists are really looking at this as a crisis. They are scrambling to find drugs," the AP article read. The Associated Press found that among the reasons for drug shortages was price gouging by secondary market vendors. It is obvious that the owners of these secondary market companies called "gray market" are placing profit over lives and Americans have been found to be dying due to this practice.

"Secondary, "gray market" vendors are business firms that buy scarce drugs from small regional wholesalers, pharmacies or other sources and then market them to hospitals, often at many times the normal price.

These sellers may not be licensed, authorized distributors," appeared in the AP news story. According to pharmacy industry representatives, at least 15 recent deaths to drug shortages based on reports by medical personnel, but many deaths and injuries go unreported.

So far this year, 210 drugs have been added to the list of drugs in short supply. The average price markup on drugs sold by secondary distributors was 650 percent, according to an August 16 report by the Premier Healthcare Alliance, a group that helps U.S. hospitals and other health providers improve their patient care and finances.

The Associated Press also reported that, in an extreme case, one vendor was offering a generic drug for dangerously high blood pressure, normally priced at $25.90 per dose, for $1,200.

Text

STATE OF NEW YORK
________________________________________________________________________
2138
2013-2014 Regular Sessions
IN SENATE
January 11, 2013
___________

Introduced by Sen. LANZA -- read twice and ordered printed, and when
printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to the price goug-
ing of medicine
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The general business law is amended by adding a new section
396-rrr to read as follows:
S 396-RRR. PRICE GOUGING OF MEDICINE. 1. FOR THE PURPOSES OF THIS
SECTION, "DRUG SUBJECT TO A SHORTAGE" SHALL MEAN ANY DRUG OR MEDICAL
PRODUCT INTENDED FOR HUMAN USE PUBLICLY REPORTED AS BEING SUBJECT TO A
SHORTAGE BY THE U.S. FOOD AND DRUG ADMINISTRATION ON ITS WEBSITE,
PROVIDED, HOWEVER, THAT A DRUG OR MEDICAL PRODUCT SHALL ONLY BE CONSID-
ERED A "DRUG SUBJECT TO A SHORTAGE" DURING THE PERIOD OF TIME THAT SUCH
DRUG OR MEDICAL PRODUCT IS LISTED AS BEING SUBJECT TO A SHORTAGE ON SUCH
WEBSITE.
2. NO PARTY WITHIN THE CHAIN OF DISTRIBUTION OF ANY DRUG SUBJECT TO A
SHORTAGE SHALL SELL OR OFFER TO SELL ANY SUCH DRUG SUBJECT TO A SHORTAGE
FOR AN AMOUNT WHICH REPRESENTS AN UNCONSCIONABLY EXCESSIVE PRICE.
3. WHETHER A PRICE IS UNCONSCIONABLY EXCESSIVE IS A QUESTION OF LAW
FOR THE COURT.
(A) THE COURT'S DETERMINATION THAT A VIOLATION OF THIS SECTION HAS
OCCURRED SHALL BE BASED ON ANY OF THE FOLLOWING FACTORS:
(I) THAT THE AMOUNT OF THE EXCESS IN PRICE IS UNCONSCIONABLY EXTREME;
(II) THAT THERE WAS AN EXERCISE OF UNFAIR LEVERAGE OR UNCONSCIONABLE
MEANS; OR
(III) A COMBINATION OF BOTH FACTORS IN SUBPARAGRAPHS (I) AND (II) OF
THIS PARAGRAPH.
(B) IN ANY PROCEEDING COMMENCED PURSUANT TO SUBDIVISION FOUR OF THIS
SECTION, PRIMA FACIE PROOF THAT A VIOLATION OF THIS SECTION HAS OCCURRED
SHALL INCLUDE EVIDENCE THAT:

EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02559-01-3

S. 2138 2

(I) THE AMOUNT CHARGED REPRESENTS A GROSS DISPARITY BETWEEN THE PRICE
OF THE DRUG SUBJECT TO A SHORTAGE WHICH WAS THE SUBJECT OF THE TRANS-
ACTION AND THEIR VALUE MEASURED BY THE PRICE AT WHICH SUCH DRUG WAS SOLD
OR OFFERED FOR SALE BY THE DEFENDANT IN THE USUAL COURSE OF BUSINESS
IMMEDIATELY PRIOR TO THE ONSET OF THE SHORTAGE; AND
(II) THE AMOUNT CHARGED GROSSLY EXCEEDED THE PRICE AT WHICH THE SAME
OR SIMILAR DRUG SUBJECT TO A SHORTAGE WAS READILY OBTAINABLE BY OTHER
PURCHASERS IN THE TRADE AREA. A DEFENDANT MAY REBUT A PRIMA FACIE CASE
WITH EVIDENCE THAT ADDITIONAL COSTS NOT WITHIN THE CONTROL OF THE
DEFENDANT WERE IMPOSED ON THE DEFENDANT FOR THE DRUG SUBJECT TO A SHORT-
AGE.
4. (A) WHERE A VIOLATION OF THIS SECTION IS ALLEGED TO HAVE OCCURRED,
THE ATTORNEY GENERAL MAY APPLY IN THE NAME OF THE PEOPLE OF THE STATE OF
NEW YORK TO THE SUPREME COURT OF THE STATE OF NEW YORK WITHIN THE JUDI-
CIAL DISTRICT IN WHICH SUCH VIOLATIONS ARE ALLEGED TO HAVE OCCURRED, ON
NOTICE OF FIVE DAYS, FOR AN ORDER ENJOINING OR RESTRAINING COMMISSION OR
CONTINUANCE OF THE ALLEGED UNLAWFUL ACTS. IN ANY SUCH PROCEEDING, THE
COURT SHALL IMPOSE A CIVIL PENALTY IN AN AMOUNT NOT TO EXCEED ONE
HUNDRED THOUSAND DOLLARS AND, WHERE APPROPRIATE, ORDER RESTITUTION TO
AGGRIEVED CONSUMERS.
(B) IN ADDITION TO ANY ACTION BROUGHT BY THE ATTORNEY GENERAL PURSUANT
TO PARAGRAPH (A) OF THIS SUBDIVISION, A PERSON INJURED BY A VIOLATION OF
THIS SECTION MAY BRING AN ACTION TO RECOVER DAMAGES. THE COURT MAY ALSO
AWARD REASONABLE ATTORNEYS FEES TO A PREVAILING PLAINTIFF.
S 2. This act shall take effect immediately.

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